atswa pilot questions answers part i - The Institute of Chartered ...

(iv)
(v)
(vi)
Bad management of resources: This occurs as a result of large scale fraud and
corruption of the leaders which tends to have adverse effect on the prices of
goods thereby increasing the tempo of inflation in the country.
Imported Inflation: This type of inflation occurs when a country imports goods
from a country or countries that are already experiencing inflation.
Hoarding: Inflation can occur in a country when there is a large scale hoarding
in the hands of major and minor distributors. When the demand for a particular
product is greater than its supply, there is bound to be high prices of these
products in that economy.
(vii) Increase in money supply: This occurs through printing of money as well as
expansionary policy measures where there is no increase in the output of goods
and service in the economy
(Any 3 x 2Marks)
(6Marks)
(c)
Control of Inflation:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Increasing the supply of goods and services
Through the use of price control
Wage control
Control of spending pattern through restrictive fiscal policy, e.g., cut in
government expenditure.
Monetary Policy- sales of government securities, etc.
Physical policy measures, e.g., total ban on importation
(Any 4 x 1Marks)
(4Marks)
(Total 12 1 / 2 Marks)
QUESTION 6
Africo International Consults Limited – a private firm of economic and financial
consultants-obtained the following national income equilibrium (y) model for a country
in Sub-Saharan Africa.
Y = C + I + G + (X – M)
Where:
C = Consumption Expenditure
I = Investment Expenditure
G = Government Expenditure
X = Export
M = Import
Given:
C = LS124 million + 0.75 Yd
I = LS 54 million
G = LS 60 million
X = LS 36 million
M = LS 42 million
33